Re: Guess the cause of my score drop

Well I don't know how it happened but I just hope you're going to be awake to provide the answer.

Indeed. Here it is:

As I’ve hinted at, my 56 points drop was the result of a string of events that just happen to have occurred at the same time. There are 3 major events, mainly just 2. One of my accounts reported a new balance, and one of my new accounts started reporting after the first statement. Normally these events would happen days apart, but due to an apparent Score Watch error, they resulted in a single alert, and therefore a single score change.

I did max out on one card, the card with a new balance.

This is because the card is a BofA-issued Visa Signature, which doesn’t report the credit limit but does report the high balance. For FICO scoring purposes, the high balance is treated as the credit limit. I’ve been in the process of building up the high balance for this card, so when BofA reported the new balance, which was also the high balance, utilization on the card was 100%. I bet this cost me quite a few points. Overall utilization was hurt, too, but not by that much. My previous utilization was around 25%. I don’t think 40% is that much different.

The last time I added a new account, I suffered a penalty of merely 15 points. My score is lower now, so the penalty should be less severe, right? However, the Score Watch alert includes the following:

"This score decrease may be caused by this new reason:

You have not established a long revolving credit history. "

With the new card added, my AAoA fell to below 5 months. I had just finished an app spree, but this new account apparently brought the AAoA down to the range that FICO considers a short revolving credit history. It looks like the critical point is at 5 months or so. The penalty for falling below this must be severe, way higher than the 15 points I had lost due to another new account.

Re: Guess the cause of my score drop

With the new card added, my AAoA fell to below 5 months. I had just finished an app spree, but this new account apparently brought the AAoA down to the range that FICO considers a short revolving credit history. It looks like the critical point is at 5 months or so. The penalty for falling below this must be severe, way higher than the 15 points I had lost due to another new account.

In the FICO algorithm, if your AAoA is less than a year, it's automatically calculated at a year is our understanding of it. At least that's the way the report data is presented from various sources.

Really with the way it rounds down, until your AAoA >= 2 years, it's stuck at the bottom for that part of the metric, so anything under that is a wash.

Edit: also not sure on that short-revolving history tag, that may be as a result of new accounts rather than AAoA.

As I explained, just one new account added and a small increase in utilization ratio alone will not cause that big a score drop. There have to be pretty special circumstances.

are you trying to say your special?

I guess having a Score Watch issue makes me kind of special

Jutz wrote:

Sounds like you have a handle on it, so really not a huge deal. Thin files tend to swing drastically. It sounds like the high balance/reported UTIL is temporary and for the best long term.

Good luck, I'm sure you'll get a similarly positive swing next month too!

Thanks! I'm still building up the high balance on my Visa Signature though, so until I reach 5k or so and pay it all off, my score will not improve much just yet.

Revelate wrote:

HiLine wrote:

With the new card added, my AAoA fell to below 5 months. I had just finished an app spree, but this new account apparently brought the AAoA down to the range that FICO considers a short revolving credit history. It looks like the critical point is at 5 months or so. The penalty for falling below this must be severe, way higher than the 15 points I had lost due to another new account.

In the FICO algorithm, if your AAoA is less than a year, it's automatically calculated at a year is our understanding of it. At least that's the way the report data is presented from various sources.

Really with the way it rounds down, until your AAoA >= 2 years, it's stuck at the bottom for that part of the metric, so anything under that is a wash.

Edit: also not sure on that short-revolving history tag, that may be as a result of new accounts rather than AAoA.

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